Teresa Clark looked at the gas dispenser as she filled the tank of her 2010 Toyota Prius at a Chevron station on Interstate 5 in San Diego on Wednesday morning.
“I just looked down and wow, $5 a gallon. Where is all this going to go?” she said. “I don’t drive much but I have a friend who has to commute to work and I immediately thought of him and oh he’s not going to be happy about this.”
The median price of a gallon of regular gasoline in the San Diego metro area hit an all-time high of $4,726 on Wednesday, beating the old record set on Oct. 8, 2012, by a tenth of a cent. Some stations saw prices well above the $5 per gallon mark.
“I never thought it would go this high, at least for another five years, but here we are,” said Emily Nolan, as she filled the tank of her Fiat.
Marie Montgomery, a spokeswoman for the AAA Automobile Club, said records have been falling in Southern California cities for the past two weeks. Only the Bakersfield area has been spared.
“Not only are gas prices going up, everything else is going up,” Montgomery said. “This is real and people have to start thinking, ‘How much can I really afford?'”
The median price of a gallon of regular gasoline in San Diego is up $1.20 a gallon compared to a year ago, according to AAA. The price exceeded $4 on April 17, 2021.
Prices have been on a steady, uninterrupted rise since the end of 2020, mirroring trends across California and the rest of the country. The median price for regular gasoline in California on Wednesday was $4.72 a gallon. The highest average in the state came in at $4.91 in San Luis Obispo. The median price in the United States stood at $3.51.
Gasoline prices are tied to the price of oil, and tensions over a possible Russian invasion of Ukraine have pushed up global prices. Brent crude, the international benchmark, and West Texas Intermediate, the domestic benchmark, have each risen from about $68 a barrel on Dec. 1 to more than $90 on Wednesday.
Prices at the pump have been rising since the fall of 2020, largely due to the financial effects of the pandemic. Right after the COVID-19 lockdowns kicked in, the roads emptied as people stopped going to work. Oil and gasoline prices fell sharply and producers suffered a financial setback.
When the economy recovered, extractors were slow to increase production because many investors pressured them to improve their results after the losses they suffered.
Crude oil production in the United States stood at 11.6 million barrels per day in the first week of February, up from 13 million in February 2020, just before the pandemic.
David Hackett, president of Stillwater Associates, a transportation energy consulting firm in Irvine, says policies aimed at curtailing fossil fuel development and the push by companies like BlackRock for environmental, social and governance investments can also be pushing prices up.
“It is not fashionable to invest in oil production,” Hackett said. “So what we’re seeing — not only with producers, but also with refiners — is a situation where banks and other financial institutions are not investing in oil, or at least very restrictive about it.”
The Biden administration announced in December the gradual release of some 50 million barrels from the Strategic Petroleum Reserve in an effort to reduce prices by increasing supply. But fuel analysts have said the release didn’t make much of a difference, considering the United States consumes just over 18 million barrels of oil a day.
Upon taking office, President Biden revoked the cross-border permit for the Keystone XL pipeline, which was set to ship some 800,000 barrels of oil a day from Canada to the Texas Gulf Coast, and suspended new drilling permits and leases in federal lands.
With inflation rising and midterm elections approaching, some Democrats in Congress have proposed offering motorists short-term financial relief by suspending the federal gas tax of 18.4 cents a gallon. A bill backed by three Senate Democrats would direct the US Treasury Department to cover money lost from the suspension of the federal gas tax with general fund revenue to prevent a shortfall in highway funding.
“The highway tax has been the same for a long time” with no change since 1993, Hackett said. “That doesn’t make gas prices higher. It is the lack of new offer”.
Relief for California motorists may not be on the horizon because February is the month that gas stations across the state switch from winter to summer fuel each year, which typically adds about 10 cents a gallon. Summer blending, intended to reduce smog, costs more because of the oxygenates the fuel needs, and refineries have to shut down briefly before processing it.
Is a median price of $5 on the horizon? AAA’s Montgomery says it’s hard to make a prediction because of the number of variables at play, but “it’s a possibility.”
In the meantime, “don’t pay that half price,” Montgomery said. “There are stations that are well below that price, sometimes 40 or 50 cents less, and it is better to look for them regularly.”
If it’s any consolation to drivers, adjusting for inflation, San Diego’s previous record of just over $4.72 a gallon in 2012 equals $5.79 in today’s dollars.